Stock Market Rise May Signal Future Weakness, According to Leading Financial Newsletter Profit Confidential

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Michael Lombardi, lead contributor to Profit Confidential, believes there is something wrong with this latest move upward in the U.S. stock market that began in the fall of 2011. According to Lombardi, the rise that took place between October 2011 and April 2012 has a distinctly uncomfortable feel about it, as key indicators within the stock market are signaling that this move up is not to be trusted.

Stock Market Rise May Signal Future Weakness, According to Leading Financial Newsletter Profit Confidential

Stock Market Rise May Signal Future Weakness, According to Leading Financial Newsletter Profit Confidential

“When there is a bull market in stocks, it is the Russell 2000 Index that usually leads the way, as this key indicator is reflective of risk-taking,” says Lombardi. “Almost all rises in the S&P 500 are led first by the Russell 2000 Index.”

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Michael Lombardi, lead contributor to Profit Confidential, believes there is something wrong with this latest move upward in the U.S. stock market that began in the fall of 2011. According to Lombardi, the rise that took place between October 2011 and April 2012 has a distinctly uncomfortable feel about it, as key indicators within the stock market are signaling that this move up is not to be trusted.

In the article “Harbinger of a Stock Market Correction?,” Lombardi notes that the Russell 2000 Index, which represents the smallest listed companies in the U.S., is a key indicator for the stock market.

“When there is a bull market in stocks, it is the Russell 2000 Index that usually leads the way, as this key indicator is reflective of risk-taking,” says Lombardi. “Almost all rises in the S&P 500 are led first by the Russell 2000 Index.”

Lombardi also highlights that the S&P MidCap 400 is also another key indicator, as it represents the mid-sized corporations listed on the U.S. stock exchanges.

“These companies usually outperform the S&P 500 in a bull market, because they will benefit most from a strong U.S. economy,” Lombardi explains.

“Clearly the S&P 500 is outperforming the Russell 2000 and S&P MidCap 400,” he says.

Lombardi believes that this is very unusual behavior, because real bull markets are usually led by the Russell 2000 and the mid-sized firms.

“In this case, it is the S&P 500 that is leading, which makes me suspect that something is wrong with this market advance,” says Lombardi.

Lombardi believes that since March of 2009 we have witnessed a rally within the confines of a major secular bear market.

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.

Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.

To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.

Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.

Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.

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